By Generational Wealth AdvisorsOct 29, 2020, 04:00 et
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed into law this year, includes a number of measures designed to stimulate the economy. One provision allows retirees to forego taking Required Minimum Distributions (RMDs) from IRAs or other defined contribution plans, such as 401(k) plans this year.
RMD amounts are based on the value of the account at the end of the previous year. Because some have accounts that will see a decline in value this year, the amount of the required withdrawal would be a larger percentage of a client’s retirement account under that scenario. The CARES Act will let retirees keep that money in their accounts, potentially recouping some of the market losses when the economy turns around and lower the 2020 tax bill for most taxpayers that do choose to forego their RMD this year.
This waiver for suspending RMDs for 2020 includes any retirement account subject to RMDs, such as IRAs, 401(k)s, Roth 401(k)s and inherited accounts.
If you are subject to RMDs, the waiver applies to you regardless of age. It includes original account owners over age 70½ (or age 72 under the SECURE Act), original account owners who turned 70½ in 2019 but have not taken their distribution yet, and inherited-IRA beneficiaries of any age. This waiver extends to inherited IRAs (including stretch IRAs).
Defined benefits plans are not eligible for this waiver, so if you’re supposed to take distributions from a defined benefit (DB) plan you must continue to do so.
The above are general rules of thumb, but there is also a flip side of thought to this. Tax rates under the Tax Cuts and Jobs Act of 2017 are historically low but are set to expire at the end of 2025. If the election brings the changes many have predicted, the likelihood of tax rate hikes occurring next year is a high probability. If so, it would make sense to consider taking the RMDs this year when the tax rates are potentially lower than they might be in future years and also to reduce the amount of future RMDs. It may make sense to consider a “bracket-filling” strategy to limit the amount of tax paid on withdrawals in 2020.
Since each client faces unique circumstances, it is important that you consult with your CPA or tax professional as early as possible to determine whether to take or waive your RMDs for 2020.
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Wealth Advisors’ affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Wealth Advisors to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Wealth Advisors is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.